STARBUCKS CORP

Starbucks Corp Annual Investment Guide
Plain-English breakdown for everyday investors

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1. The Growth Story: Coffee Cups Half Full

• Store strategy: Opened 5% more stores globally while closing 627 underperformers
• Revenue up 3% to $37.2B – Still a drinks company at heart (73% from lattes/Frappuccinos)
• Hidden speed bump: Building new stores costs 18% more due to construction inflation

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2. Financial Health Check

• Profit plunge: Earnings dropped 46% to $3.8B (blame low-margin licensed stores + rising costs)
• Debt moves: Using interest rate swaps ("financial insurance") to manage $5B+ debt
• Cash safety net: Most cash held in easy-to-sell assets (like stocks/bonds) for quick access
• Cost controls: Locked dairy prices + foreign exchange rates through 2025 (fewer latte cost surprises)
• Ongoing pressures: Labor costs up 5%, $200M supply chain losses

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3. Top Risks to Watch

☕ Drink dependency: 73% of sales from beverages – risky if health trends accelerate
💸 Interest rate gamble: Swaps help now, but rising rates could still bite
🌍 Climate threats: Droughts/floods could disrupt coffee bean supplies
📱 Tech fragility: 30% of sales come through apps/Cards – system crashes = lost sales
📉 Hedging hiccups: Currency swings beyond their contracts could hurt profits

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Investment Bottom Line

Starbucks in 2024: A brand balancing growth with financial tightrope walking.

Reasons to consider buying:
✅ Revenue still growing (3%) despite economic headwinds
✅ Smart cost controls (locked dairy prices through 2025)
✅ Strong cash reserves for emergencies

Reasons to be cautious:
⚠️ Profits nearly halved – can they rein in costs?
⚠️ Heavy reliance on drinks leaves little margin for error
⚠️ Rising rates + climate risks could squeeze further

Verdict:
Hold if you believe Starbucks’ global brand and 98 million weekly customers can outlast short-term challenges.
Sell if you’re wary of consumer spending shifts or want simpler financials without hedging complexities.

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Final note: While detailed, Starbucks’ report focuses heavily on financial instruments – everyday investors should watch tutorial videos on "interest rate swaps" if considering this stock.